The expected return on a life insurance policy. The Expected return: The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns. Life Insurance Policy: Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.
The expected return on a life insurance policy. The Expected return: The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns. Life Insurance Policy: Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.
Solution Summary: The author explains the expected return on a life insurance policy, which is calculated in the same way as the common stock. The correlation coefficient measures how the change in one value affects the other.
Formula Formula ROI (%) = Net Income Principal Amount × 100
Chapter 8, Problem 3Q
a)
Summary Introduction
To explain: The expected return on a life insurance policy.
The Expected return:
The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.
Life Insurance Policy:
Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.
b.
Summary Introduction
To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.
Correlation Coefficient:
A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.
c.
Summary Introduction
To explain: The reason for buying the life insurance in spite of low expected returns.
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
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